How to Write a Simple Binding Contract Select a Template Contract. If you have a specific contract in mind, Agreement Between the Parties. It may seem obvious, but the most essential element Exchanging Things of Value. A contract is not valid unless the parties exchange something of To be legally binding, a contract needs two essential components: 1) an agreement, and 2) consideration. Within the agreement and consideration lies an assortment of provisions that add to the legality of a contract. These include the offer, performance, terms, conditions, obligations, payment terms, liability, and default or breach of the The definition of a contract is a legally binding, and enforceable by law, agreement made between two or more parties. In cases of dispute when the parties are arguing whether a contract, or fundamentals of it, have been broken, it may be required to take the case before the courts.